Assume that ABCO is a U.S.multinational corporation. Its foreign subsidiaries must report income in their respective countries according to GAAP in those countries. How must ABCO report its consolidated financial statements?
A)ABCO must choose any one country's accounting standards and combine the subsidiary reports into the parent company's statements using that one country's GAAP.
B)Since the company is operating in several different countries,the International Accounting Standards must be used for the consolidated financial statements.
C)Since ABCO is a U.S.corporation,U.S.generally accepted accounting principles must be used for the consolidated financial statements.
D)On the consolidated financial statements,each subsidiary's financial results must be shown in the currency of the country where the subsidiary is located.

Question

Quizplus · Accepted Answer

As a U.S. multinational corporation, ABCO is required to follow U.S. GAAP for their consolidated financial statements. The fact that foreign subsidiaries report income according to GAAP in their respective countries does not impact the reporting requirements of the parent company. Therefore, Option C is the best choice. Options A and B are not accurate, as the global consolidation should be presented following US GAAP instead of the standards of a foreign country or the IAS. Option D is not incorrect, but it is not the best choice since it is not the primary requirement for preparing the consolidated financial statements.

Assume That ABCO Is a U